February 24, 2014
US SIF Publishes Political Spending Guide for Investors
by Robert Kropp

Confronting Corporate Money in Politics focuses on using the proxy ballot to advocate for
transparency in corporate political spending and lobbying expenditures.

Since 2010—not at all coincidentally, the year in which the US Supreme Court issued the
controversial Citizens United decision—shareowner resolutions addressing corporate political
spending have been filed in record numbers. The 2014 proxy season is no different, as a coalition
of sixty institutional investors announced recently that it has filed resolutions addressing
lobbying expenditures with 48 companies.

Why so many shareowner resolutions, year
after year? “The information that is available to investors and the public does not provide a
comprehensive picture of the spending” of corporations, according to Confronting Corporate Money in Politics, a
guide for investors recently published by the US SIF Foundation. The guide on corporate political
spending is the third in a series by US SIF.

Given the emphasis on the filing of
resolutions by institutional investors, it's not surprising to learn that the guide focuses on
shareowner action. And as the number of shareowner resolutions continue to dominate corporate proxy
ballots, “the average vote in support of political spending disclosure proposals has almost
quadrupled over the past decade and topped 30 percent for the last four years,” the Center for Political Accountability
(CPA). CPA and its investor allies have persuaded at least 100 of the nation's largest
corporations to adopt disclosure and board oversight of political expenditures.

According
to CPA, “a total of 217 companies have formally been engaged through a shareholder resolution on
the issue of political spending disclosure and accountability, resulting in a total of 118
agreements that led to a withdrawal of the resolution.” As shareowner activists have learned, a
majority vote is not necessary when a significant number of shareowners express their concerns to
corporate boards.

The resolutions filed for the 2014 proxy season adopt two tracks in
addressing the role of corporations in the political process. “A growing number of companies are
being asked for more oversight and disclosure of their spending,” the guide states. And since
direct political contributions by corporations are dwarfed by lobbying expenditures, “Shareholders
increasingly are asking companies to disclose their lobbying activities and expenditures in order
to evaluate whether a company’s lobbying is consistent with its expressed business goals and
objectives and whether it may present risks to the company,” as well.

A coalition of sixty
investors announced recently that they have filed 48 resolutions with companies, requesting that
they “annually report their federal and state lobbying. That includes any payments to trade
associations used for lobbying as well as support for tax-exempt organizations that write and
endorse model legislation.”

Advocating for effective public policy is central to the
mission of US SIF, and the guide concludes with a reminder of its importance. “It is important for
you or your institution to make your voice heard on public policy issues,” it states. “You can join
hundreds of thousands of other investors, large and small, who have petitioned the SEC to require
companies to disclose their political contributions.”

In 2011, a group of academics
calling itself the Committee on Disclosure of Political Spending filed a petition with the Securities and
Exchange Commission (SEC), calling for the establishment of regulations mandating that public
corporations disclose their political spending activities. The Commission has received hundreds of
thousands of comment letters on the issue, most of them in support of disclosure.

Since
then, the petition has been pending at the SEC, and the Commission has indicated that it does not
plan to act on the issue in 2014.